Chinese Overseas M&A Performance and the go Global Policy
This paper investigates whether stock markets view Chinese OMAs as increasing shareholder wealth. The subject is of interest given the influential role that the government plays in Chinese firms’ overseas activities, and the fact that the government may have objectives other than maximization of shareholder wealth. We examine 145 OMAs by Chinese acquiring firms over the year 1994-2008. We find some evidence that markets positively responded to news of Chinese OMAs. However, we also find that markets responded less favorably after China implemented its Go Global policy encouraging overseas investment. We hypothesize two reasons for this: First, the expansion of OMAs under Go Global resulted in Chinese firms pursuing less attractive targets, on average. Second, Go Global re-directed investment towards industries having national strategic value but diminished profit value. Using a Blinder-Oaxaca decomposition procedure, we find no evidence to support this latter hypothesis. Thus, to whatever extent strategic interests may motivate China’s Go Global policy, it does not appear that their pursuit has come at the expense of shareholder wealth.
|Date of creation:||17 Apr 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 64 3 369 3123 (Administrator)
Fax: 64 3 364 2635
Web page: http://www.econ.canterbury.ac.nz
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Qi, Daqing & Wu, Woody & Zhang, Hua, 2000. "Shareholding structure and corporate performance of partially privatized firms: Evidence from listed Chinese companies," Pacific-Basin Finance Journal, Elsevier, vol. 8(5), pages 587-610, October.
- Agata Antkiewicz & John Whalley, 2007. "Recent Chinese Buyout Activity and the Implications for Wider Global Investment Rules," Canadian Public Policy, University of Toronto Press, vol. 33(2), pages 207-226, June.
- Chi, Jing & Sun, Qian & Young, Martin, 2011. "Performance and characteristics of acquiring firms in the Chinese stock markets," Emerging Markets Review, Elsevier, vol. 12(2), pages 152-170, June.
- Narjess Boubakri & Georges Dionne & Thouraya Triki, 2006.
"Consolidation and Value Creation in the Insurance Industry: the Role of Governance,"
Cahiers de recherche
- Boubakri, Narjess & Dionne, Georges & Triki, Thouraya, 2008. "Consolidation and value creation in the insurance industry: The role of governance," Journal of Banking & Finance, Elsevier, vol. 32(1), pages 56-68, January.
- Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
- Martin Hovey & Larry Li & Tony Naughton, 2003. "The Relationship Between Valuation and Ownership of Listed Firms in China," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(2), pages 112-122, 04.
- Gunasekarage, Abeyratna & Hess, Kurt & Hu, Amity (Jie), 2007. "The influence of the degree of state ownership and the ownership concentration on the performance of listed Chinese companies," Research in International Business and Finance, Elsevier, vol. 21(3), pages 379-395, September.
- Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan, vol. 19(3), pages 411-432, September.
When requesting a correction, please mention this item's handle: RePEc:cbt:econwp:10/25. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Albert Yee)
If references are entirely missing, you can add them using this form.